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Profit Confidential, an e-letter published by Lombardi Publishing Corporation, a 26-year-old consumer publisher that has served over one million customers in 141 countries, is releasing its comments, weighing in on the recent highs on the S&P 500 and Dow Jones Industrial Average and mediocre third-quarter earnings expectations and warning of rising near-term investment risk.The S&P 500 and Dow Jones Industrial Average both entered record territory after the Federal Reserve announced it was going to continue its $85.0-billion-per-month bond buying program on September 18. By keeping the monetary stimulus in place, the Federal Reserve is keeping interest rates low, which is, in turn, helping fuel the current bull market, according to Profit Confidential. (Source: “Press Release,” Federal Reserve web site, September 18, 2013; http://federalreserve.gov/newsevents/press/monetary/20130918a.htm.)
“Investment risk for the very near-term stock market is going up,” observes Profit Confidential’s financial expert Mitchell Clark, commenting on the recent occurrences. “There’s been pressure on interest rates, investor sentiment was hit by the lack of tapering to quantitative easing, and finally, the third-quarter earnings outlook is mediocre at best.”
Clark notes that everything related to the stock market has been exceptional this year. Despite earnings growth being completely and totally lackluster, the main stock market indices proceeded to rise tremendously based on continued monetary expansion and the fact that there really is nowhere else for investors to go but into stocks.
“The second-quarter earnings season was unimpressive,” says Clark. He believes it will be the same for the third-quarter reporting season. According to the Profit Confidential editor, financial results very well could be the catalyst for a major market retrenchment in October; he urges all investors to prepare for this eventuality, “Generally speaking, I do think that stocks can continue to rise in 2014; however, corporations will have to provide genuine earnings growth and top-line growth to keep valuations from pushing the envelope.”
Given current earnings and expectations for 2014, Clark maintains the stock market is at least slightly—if not fully—overvalued at present. With the expectation of very modest earnings growth in the third quarter and little in the way of sales growth, especially among large-cap companies, recent stock market strength has been an expansion of valuations only.
Clark states that he is therefore very cautious on the near-term outlook for stocks and believes that the marketplace will continue to stick with its existing winners. “These are the companies that can deliver on revenue and earnings expectations with rising dividends,” says Clark. His conclusion is that it’s a blue-chip market, and in a slow-growth environment, the big brand-name companies are what investors should stick with.
Profit Confidential is published by Lombardi Publishing Corporation, which has served over one million customers in 141 countries since 1986 and is one of the largest consumer information publishers in the world. For more information on Profit Confidential and Lombardi Publishing Corporation, visit www.lombardipublishing.com.
Contact Info:
Name: Wendy Potter
Email: Send Email
Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Phone: 905 856 2022
Website: http://www.profitconfidential.com/
Release ID: 23151
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